This unit focuses on justifying a sustainability improvement project by quantifying the expected benefits and costs and then ‘making the case’ to the decision makers. To do this an idea or recommendation needs to be developed into a defined project, with enough detail to identify the main benefits and costs.
Traditionally a business case is interpreted in terms of money. Not all benefits and costs will have an obvious dollar value but they still need to be considered. Wherever possible the benefits and costs should be converted into a dollar value or some other ‘measureable’ that is of value to the business. For example, it might be possible to estimate the value of fewer complaints by calculating the time (wages) and other resources needed to respond.
Benefits might also be identified in terms of costs that are avoided; and in some cases the cost of doing nothing might be significant. For example, not improving the emission of noise to surrounding homes may lead to increases in complaints and loss of goodwill as well as Environment Protection Authority (EPA) fines.
It may not be feasible to find exact quantities for every cost and benefit; estimations are sufficient for the purposes of the unit.
The business might not be using ISO 14001 Environmental management systems but the standard might be used as a framework to help define the project and analyse the expected benefits.
The unit does not go beyond preparing the business case. Other units apply to the previous steps in developing recommendations and sustainability plans and the next steps in implementing the project (see related units below).
As part of an AQF 5 qualification it is assumed that the learner will ‘… apply knowledge and skills to demonstrate autonomy, judgement and defined responsibility in known or changing contexts and within broad but established parameters’. Read more about AQF qualification levels…
Contextualising the unit needs to take this into account.
1 Define the intended sustainability improvement project
This element is about defining the project that is being put up for approval in the business case.
For this element the project goals, regulatory requirements, stakeholders, current state and critical success factors need to be determined. To ‘determine’ in this context means to find out, so if these are available in existing sustainability plans that’s fine, or they may need to be determined by talking to people or other avenues of research.
2 Quantify expected benefits from the project
This element is the process of determining and quantifying benefits. Typically the benefits will be expressed in dollars, but non-financial benefits should also be captured and where possible converted to dollars or another measure of value.
The element requires the areas of production, maintenance, product life cycle and health, safety and environment (HSE) to be considered, but other areas of benefit should be included if they are relevant to the business.
3 Determine costs required to implement project
This element lists some headings against which costs should be estimated, again typically measured in dollars. Any recognised method for making these estimates may be used.
Fixed capital is a defined accounting term, also reinforced by tax law. It covers all improvements and other plant, equipment and building expenditures; other than maintenance which is about repairs to keep things as they are.
Personnel costs will include additional employees and training as well as contractors.
Financial costs refer to the cost of borrowing money. It will generally be estimated by the accountant or they may provide a nominal rate to use in the business case.
Time-related costs depend on how long it will take to implement the sustainability improvements. If the project can be completed in a couple of months then the time-related costs are probably negligible. However, a lengthy project will have costs associated with the value of money over time, borrowing costs and the cost of disruption. Businesses typically have a formula for this which brings all costs into today’s dollars. If they don’t then any standard formula should be used along with a discount rate agreed with the finance or senior management.
4 Prepare a proposal justifying project
Now that the benefits and costs have been estimated the return on investment (RoI), discounted rate of return or similar can be calculated.
‘Appropriate methods’ for comparing benefits to costs will be the ones used by the business, but should be standard accounting measures.
It is assumed that the business will have a Capital Expenditure proposal form or procedure which should be used. If there is not a standard form or procedure the business case should spell out:
- the problem being solved
- the reason for tackling the problem
- benefits and costs of the alternatives considered and related figures (including taking no action)
- the recommended option
- an outline of what needs to happen to implement the project.
The business case should present a logical case for proceeding with the project.
As an RTO your assessment must cover all of the requirements of the unit of competency, including Elements, Performance Criteria, Range Conditions and the new Assessment Requirements. While the Assessment Requirements can be downloaded (training.gov.au) as a separate document they are part of the complete unit of competency.
The Assessment Requirements comprise Performance Evidence, Knowledge Evidence and Assessment Conditions. The Performance Evidence and Knowledge Evidence sections are self-explanatory and go some way to defining the evidence that you need collect.
However, they do not specify the format or structure that evidence should take. In order to be applied in a range of businesses and sectors, they do not specify things such as:
- how to quantify benefits and costs
- methods for comparing value and calculating ‘return’
- the structure and format for defining the project and development the proposal (business case).
This enables you to identify typical practices for a sector or specific methods used by a business and to incorporate these within your assessment processes and evidence collection.
It is expected that in most contexts written documentation of some sort will be required to enable clear communication of the business case for consideration by decision makers. In some businesses the proposal might also be presented to management.
Documentation of the project scope, benefit/costs and RoI will also typically be needed so that the implementation and monitoring can be undertaken to specifications.
The Assessment Conditions define the conditions that must apply to the assessment process, for example:
- The collection of performance evidence is best done from a report and/or folio of evidence drawn from:
- a single project which provides sufficient evidence of the requirements of all the elements and performance criteria
- multiple smaller projects which together provide sufficient evidence of the requirements of all the elements and performance criteria.
- A third party report, or similar, may be needed to testify to the work done by the individual, particularly when the project has been done as part of a project team.
- Assessment should use a real project where the determination of the carbon footprint along a value chain or portion of a value chain occurs for an operational workplace.
They also provide outline how the assessor can meet the requirements for vocational competency and currency:
- Technical competence can be demonstrated through:
- relevant VET or other qualification/Statement of Attainment AND/OR
- relevant workplace experience
- Currency can be demonstrated through:
- performing the competency being assessed as part of current employment OR
- having consulted with an organisation providing relevant environmental monitoring, management or technology services about performing the competency being assessed within the last twelve months.
Most units of competency require some skills that are ’embedded’ or assumed. These are required within the unit but are not spelled out in the elements or performance criteria or range statement.
In this unit they include concepts and skills such as:
- cost of capital vs operational improvements
- return on investment (RoI)
- time value of money
- presenting and organising data
You need to take these into consideration in planning your resources and delivery. You will need to determine whether your participants already have these skills or whether you need to cover them in your training and skills development activities and your resource materials.
Assessment of the embedded skills is a given; they must be assessed because they form part of the unit, or expressed differently, if the unit is assessed correctly, it will automatically include an assessment of these embedded skills.
If the embedded skills can not be demonstrated additional training, mentoring or other skills development activities might be required. In some cases these might align to other units of competency.
In developing a training and assessment strategy you will need to customise the program and decide which units to package into your program and whether to group any units for delivery and assessment. You might want to cluster units, or integrate the content into modules or learning objects.
How (and whether) to group the units will vary depending on the needs of the participant, the needs and goals of the business and how it operates.
MSS015007 Develop a business case for sustainability improvements forms a natural partnership with the units that make recommendations that require approvals, for example:
- MSS014002 Evaluate sustainability impact of a work or process area
- MSS015002 Develop strategies for more sustainable use of resources
MSS015007 Develop a business case for sustainability improvements does not go beyond making the recommendations in the business case. Further progress on the recommendations might be covered by other units, such as:
- MSS015009 Implement sustainability plans
In some situations it might be useful to cluster MSS015007 Develop a business case for sustainability improvements with units that provide supporting skills, for example:
- MSS015001 Measure and report carbon footprint
- MSS015010 Conduct a sustainable water use audit
- MSS015011 Conduct a sustainability energy audit
- MSS015012 Conduct an emissions audit
- MSS015013 Conduct a sustainability related transport audit